Life Insurance

Life Insurance

A life insurance policy is an agreement between an insurance company and a policyholder that offers financial coverage under which in the unfortunate event of the insured person's demise during the term of life insurance plans the insurance company guarantees to pay a certain amount to the nominated beneficiary. In exchange, the policyholder agrees to pay a predefined amount of money as premium either on a regular basis or as a single premium. Buying Life Insurance has many advantages including its usage as a loan collateral, smooth continuity of business and also tax benefits.

Life Insurance

Term Plan

The purest and most basic form of Life Insurance is called Term Insurance Plan. Term Plans help you safeguard your family from financial worries that arise due to unfortunate circumstances. Term plans are pure risk cover plans with or without maturity benefits. These pure risk plans cover your life at a nominal cost for a specific period or term.

They are all the more important if you are the chief wage earner in your family. No matter how much you have saved or invested over the years, sudden eventualities, such as death or critical illness, always tend to affect your family financially apart from the huge emotional loss. Term plans also let you avail of the benefit to cover your outstanding debts like mortgage, home loan, etc. In case something happens to you, the financial burden is borne by the insurance company and not your loved ones


Benefits

  • High insurance cover at lower costs
  • Financial security against loans and mortgages
  • Additional rider benefits like critical illness, accidental death/ disability
  • Rewards you for healthy lifestyle with lower premium rates for non-tobacco users
  • Option to pay premiums single, annually, half-yearly, quarterly or monthly for regular & limited premium paying term policy

Key Features

While buying a term insurance plan, the buyer must evaluate the following features:

  • Claim Settlement Ratio
    The insurer’s claim settlement ratio provides a clear picture of the insurance provider to the prospect policy buyers. The ratio of claim settlement is released by the Insurance Regulatory and Development Authority (IRDA) India every year. A claim settlement ratio that is consistently good indicates that the insurance provider has been quick and robust in its claim settlement process
  • Solvency Ratio
    The solvency ratio is something that tells whether the insurance provider chosen will be capable financially for settling the claims if the requirement arises. As per IRDA, every life insurance provider should maintain a solvency ratio of 1.5 at least.
  • Enhanced Cover
    Some insurance companies offer the option of enhanced cover in the term insurance policy. In this option, the policyholders can enhance the coverage of the policy under particular circumstances or critical situations.
  • Riders
    While purchasing a term plan, it is important to check the rider benefits offered by the insurance company such as terminal illness, critical illness etc. An insurance rider is extra to the essential plan that offers advantages far beyond the subject of the policy in case of any eventuality
  • Premium
    The premium rate of a term insurance plan plays a vital role while purchasing the plan. Hence it is important to compare term insurance policies online and choose the term plan which offers higher coverage at an affordable premium rate. Additionally, choose a company that provides discounted premiums to non-smokers

Premium

Below are some of the key factors that affect the premium of a term insurance policy:

  • Age
  • Gender
  • Policy Term
  • Profession
  • Health
  • Medical History
  • Smoking/ Drinking Habitsc